A discussion of health care: costs, reimbursement and insurance. Part 3 concludes a TCV interview with Washington Hospital Healthcare System CEO Nancy Farber.

TCV: What is Washington Hospital? How is it different from other similar hospitals in our region?

Farber: Washington hospital is a public hospital for private patients, accountable to its community. It is a free-standing hospital owned by the taxpayers with a publically-elected board. Basically, there are two kinds of hospital districts. One is supported with a parcel tax such as El Camino Hospital which, every year, receives upwards of $4 million whether they need it or not. This is part of the tax structure in that area.

The board of directors for this hospital decided that there would be no parcel tax. They did impose a tax to build the hospital between 1948 and 1958 and raised $3 million to open a 150-bed hospital. After that, no money was taken from the taxpayers for operations. All Washington Hospital operations are self-funded. I have a $1.7 billion budget which is a huge undertaking.

TCV: What does the CEO of Washington Hospital Healthcare District do?

Farber: Everything that goes wrong in this building ends up on my desk. It doesn't matter whether it is a question of product liability, injury, malpractice, employee issues or vendor performance. I usually see people because there is a serious problem that needs to be solved. A Performance Evaluation that may result in termination is always reviewed by me.

Peer review is dicey and takes the most amount of time. This occurs when a physician doesn't perform as expected or have a serious behavior problem. Doctors are like anyone else and may have some of the same issues as many others in our society. I am considered the "board in residence" and before any formal hearing by the board of directors, I have reviewed the matter very carefully.

I spend a lot of time with attorneys to make sure we are doing things the way we are supposed to, risk management, labor negotiations. Most of the time, I deal with the big, bad problems that have bubbled up to the top. Some are really horrible and may not have good solutions. I always use a "patient first" ethic to help resolve these issues.

The fun part of the job is strategic planning. I enjoy that because you are able to imagine the future and build on your knowledge and experience. Creating something new to benefit the community is exciting.

TCV: How does Washington Hospital differ from a county hospital?

Farber: A county hospital has the obligation to accept all medically indigent patients. They are paid a higher rate for these services than what Washington Hospital receives for the same patient. Their mission is to take care of those without other care resources. In Alameda County there has been poor distribution of these services. Everything that is built for this group of patients is built in Oakland. As the years have gone by, southern Alameda County has changed from farm fields to a more urban setting and yet all county services have focused on Oakland. These facilities are funded by the county and governed by county supervisors.

TCV: What makes operating a hospital different from other businesses?

Farber: It is probably one of the most complicated businesses in the world. Washington Hospital has a publically-elected board which means every constituent - all members of the community - has a right to come to the board and voice their opinion. Even those who do not live in the area have that right. This hospital has an organized medical staff of nearly 500 doctors who are independent contractors. This is a self-governing association that writes its own rules for patient care and peer review. Ultimately, if there is a peer review problem which works its way up through their structure, it is brought to the board which is required to take action. Physicians are independent minded people. Their training is to make decisions even in the dead of night on their own - and they had better be right.

TCV: Why did the community decide to build Washington Hospital?

Farber: A couple of things occurred that instigated the creation of this hospital. One was the closure of the birthing home in Niles. Also those involved in farming accidents were forced to travel to San Jose, Alameda or Oakland before they could receive hospital treatment. Some died before they could reach critical support services. When someone from this area required hospital services, a local doctor would leave to attend to them. This put an unacceptable strain on medical resources in this area. A group of physicians and citizens decided to form a hospital district for two primary reasons: a place to have babies and provide emergency services. When I came here 25 years ago, the number one reason for admission to this hospital was to have a baby. The median age in town was 23 years of age. Of course, things have changed significantly. Our median age is now much older.

TCV: With this change, what types of patient care are now most prevalent?

Farber: Repetitive motion problems, orthopedic in nature, cardiac issues and senior patients with pulmonary obstructive disease and related problems. Cancer is also prominent in this area. Much was discussed about breast cancer rates in Marin County but the incidence in the two most affluent zip codes in our area was higher. We have built a huge program around mammography which has grown into the Women's Center with a digital unit that is fast and accurate. The board has been very generous about making sure our hospital has excellent equipment and personnel. There are many businesses that locate here because this hospital is here.

A private, non-profit hospital can spend its money anywhere it wants. The Sutter system, for instance funnels any profit to its headquarters in Sacramento. If we have a profit, it goes right back into this community. When we make money, everyone benefits with more free care, better equipment, attract new programs and skilled doctors.

TCV: What do you see as your imprint on Washington Hospital?

Farber: Locally accountable care is the best possible care even though, at times, public comment can be brutal. I have been very clear about the identity of this hospital. I wanted it to remain a district and board members to see this as an advantage. In many other district hospitals, a new administration often tries to find a way to stop being a district. This happened at El Camino Hospital with disastrous results.

My father, a physician, taught me a "patient first" ethic. All decision making begins with the patients. Doctors are important and so are board members and everyone else, but all decisions must begin with the patient. There must be a moral structure that everyone understands. We have made decisions around this ethic that conventional wisdom would label as "dumb." In 1995, the conventional wisdom was to get rid of nurses; they were expensive. Many practiced the philosophy of only employing the number of nurses required by law and replace them with nursing aides and Licensed Vocational Nurses.

I made the decision that the reason doctors bring their patients to the hospital is because they need and require the care of a Registered Nurse (RN). Physicians are in the hospital, but may see a patient once a day. Those responsible for continuous patient care are nurses who are trained to provide skilled care and call the doctor if a patient displays problems outside acceptable parameters. I decided to do the opposite of what every management magazine and health care advisor was telling us to do.

By the end of 1995, our staff was 70 percent RN and we have not varied from that. This was a decision based on the patient first ethic although it was scary because others in the health field were urging a different course of action. You must, at times, have the courage to defy conventional wisdom; not medical facts, rather conventional wisdom. When nurse staffing ratios were mandated in Sacramento, we were already there and didn't have a problem.

In exchange for the high ratio of RNs at Washington Hospital, I asked nurses to maintain a high profile by wearing white and display their nursing pins. We created a 10-year pin for our nurses emblematic of their professionalism. The idea was to give the public what they need by being the best at what we do.

TCV: How has Washington Hospital responded to poor economic conditions in our area?

Farber: The first thing I have done about this is to create a special discount exclusively for district residents. Discussions about a bill begin with a 45 percent discount. This was done last year. Based on income, cost of care can be deeply discounted.

TCV: Is bond money used for hospital operations? How can the public be confident that funds are being spent correctly?

Farber: Bond money is going toward the new hospital we are building. We are not spending this money on anything but construction costs. Hospital construction is very expensive especially in California due to seismic standards. Our location, 500 yards from the Hayward Fault, means these regulations are very serious for us. We have seismically retrofitted our current facility. When Bond Measure FF passed for $190 million, there was no legal requirement for the hospital to create a Bond Oversight Committee. We did it anyway to assure the community that the money was being well spent. We are audited every year and I have been told by these independent auditors we have a clean report.

Bond money is actually insufficient for everything that needs to be done and we are thinking of revenue bonds to complete necessary funding. The power plant alone will cost $80-$90 million. Many changes are like a domino effect. For instance, the Center for Joint Replacement - not covered by bond money - will move since its current location is where the new Emergency Room and Critical Care Units will be.

TCV: Is there anything else that helps Washington Hospital attract and retain the best and brightest?

Farber: Stability. The way employees are treated here. We don't treat labor unions like they are the enemy. This too is counter-intuitive in terms of conventional wisdom, but I understand that we are all working together toward a common goal. In the past we have lobbied together and been productive. Hopefully we can continue to do this. Employees are treated with respect and honor. Many employees have never worked anywhere else so do not have the perspective of other institutions, but those who have come from other hospitals are aware of the good working conditions. Everyone here is important - nurses, housekeeping, everyone. We put managers, hourly employees together to solve problems. In that way, we all walk a mile in each other's shoes. Our corporate culture has changed to provide a supportive management style that benefits all employees.

TCV: What hopes do you have for Washington Hospital's future?

Farber: In the future, I hope the board continues to support a public, locally accountable institution. Even though it is difficult to be a public entity, I believe that is the right path. I hope we have university residency training programs at Washington Hospital. This will raise our level of performance. Our Neuroscience Institute is in its fledgling years with the new gamma knife. I would like to see that grow, treat a lot of patients and make a difference. We recently became a stroke receiving center and would like to see that program grow. Only two hospitals in our county are designated as a "stroke center" - Alta Bates and Washington.

Our hospital is providing world class service and should continue as a district hospital, serving our residents. The future of Washington Hospital should continue to serve our community with the best care possible. There is no reason why we should have to stand in anybody's shadow.

This series will continue next week as TCV talks with Dr. William Nicholson, Chair of the Washington Hospital Healthcare District, about